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"Skills shortage" is a term that has been bandied around since
the IT industrys inception. ITs constant evolution,
coupled with the increased prevalence of technology across a
broader spectrum of industries and functions keeps creating the
need for new types of skills. And skills, it seems, are scarce as
it is. But that is just one side of the story.

General economic and social conditions in Australia can - and do
- affect the skills availability too. For instance, the Reserve
Bank of Australias monthly statement on Monetary Policy
recently suggested that the exceptional performance of the labour
market, and the unemployment rate declining to its lowest level
since the 1970s, could exert upward pressure on wage and price
inflation. The implications for all sectors of the job market are
easy to identify. When it comes to skills shortage, however, a
definitive agreement is harder to come by.

According to the Department of Employment and Workplace
Relations Skills Shortage Survey Update and Employment
Vacancy Trends, national ICT skills shortage is not a real trend,
although there are state-specific causes for concern. Moreover, the
Graduate Careers Council of Australias annual report
indicates that in 2000, 12 per cent of IT graduates had difficulty
finding employment, a figure which has now risen to over 30 per
cent.

Pressure on ICT wages has not materialised either, with average
graduate salaries five years ago at A$37,000 and today only A$1,000
higher. Penny Coulter, general manager of recruitment agency, Nova
IT, sums it up: "We are certainly heading towards a skills shortage
in IT. There are still candidates now but we are seeing tension in
areas such as business analysts, system analysts and project
managers. Development skills and web-based technologies are
starting to increase in popularity again and we will see increased
demand for VoIP soon as well."

Cassandra Ashworth, manager of Excoms National EXpress IT
course, recently told The Ages Next section: "The industry is
screaming out for quality trained graduates today ... When the
universities produce these in three years time, where will we
be? How many of those roles will have been moved offshore?"

Get ready
One proposal that has been put forward is to increase the number of
skilled IT workers in Australias Skilled Migration
Program.

Adovocates of increasing the number of skilled migrants, such as
The Information Technology Contracts and Recruitment Association
(ITCRA), recently presented their recommendations to the Federal
Minister for the Department of Immigration, Multicultural and
Indigenous Affairs (DIMIA), Amanda Vanstone. And the Government
seems to be listening.

However, a recent study, led by Monash University researcher Bob
Birrell, has found that importing skilled IT workers, could be to
the detriment of local job seekers. Entitled The Myth of Too Many
University Graduates, the study found that in 2002-03, new
Australian IT professionals were weighted more heavily towards
migrants than domestic aspirants.

But Coulter, who is also a director of ITCRA, is unmoved by the
report. She believes the local market is about to be hit by another
skills shortage within six to 12 months. Importing IT workers would
not solve the problem fast enough. "There is a lag between when
DIMIA will be aware of what is happening in the market and when
they include ICT skilled workers on the (Migration Program)
list."

Shorter-term sponsorships also posed problems during the dot-com
boom, with employers exploiting sponsorships and keeping skilled
workers on, rather than using them to train up Australian workers
to cope with demand.

Another solution supported by IT industry associations and
customers is to better promote IT as a career to graduates and then
better train them once they are in university programs.

"Computer science degrees have seen a drop off in enrolments
post Y2K and the technology boom, as people no longer see it as a
secure career. Additionally, the perception that IT is a stressful,
hard job with long hours prevails. We need to start marketing the
industry differently," says Coulter.

The Federal Department of Communications, IT and the Arts
(DCITA) has formed a working group to analyse the future of IT
skills in Australia.

David Wilson, associate dean of education at the IT faculty of
the University of Technology, Sydney, leads a committee of his NSW
peers that promotes IT courses. Quoted recently in the Australian
Financial Review, Wilson says: "Weve said all along
[combating the skills shortage] really needs to be a both a Federal
Government and cross-industry initiative, as we all have a vested
interest in producing professional IT people."

These are big, long-term ideas, with the common thread being the
need to develop new resources and skills. Surprisingly, better
leveraging existing skills or retaining existing skills is not on
the radar of policy influencers, despite it potentially being an
easier first step.

Critics say the recruitment industry is ineffective in
appropriately matching candidates and roles, let alone implementing
any initiatives to alleviate skills shortages. An IT professional,
currently searching for a job so wishes to remain anonymous, is
frustrated by some recruitment practices he views as severely
detrimental to the IT industry.

"IT recruiters are unable to understand even the basic
categories of IT knowledge, forcing them into keyword matching
mode. Based on the ultimate premise that a candidate is a match
based on keywords and title, I wonder if anyone ever gets an
opportunity to do anything that he or she has not done before?

"We have enough issues in the industry itself, without someone
standing at the door knocking out good people without even the
elementary ability to tell who they are and what they could
be."

With 235,000 ICT workers in Australia in 2003-2004, and a large
percentage of these going through recruitment agencies, industry
organisations like ITCRA, and even others such as the Australian
Computer Society (ACS) and Internet Industry Association, may be
able to shed some light by auditing their members recruitment
practices.

H.R. versus I.T.
In one view, recruitment agencies are not naturally designed to
overcome this issue, as consultants are usually HR professionals,
not industry specialists. This gives them insight into a
companys needs, its culture, and the ability to influence
people towards a certain job, negotiate between the company and
candidate and assess softer skills such as
communication and people management. But it also means recruiters
generally lack industry expertise.

According to legal firm INHOUSE, a company using in-house
recruitment resources can overcome this lack of technical knowledge
by including the hiring manager in the process from the beginning.
Without this balance, the result can be the wrong candidate in the
wrong role. This in turn leads to a high attrition rate and the
vicious cycle continues as recruitment consultants dismiss
candidates for not being in their last role long enough. And with
Gartners estimate that the cost of hiring a new person is 2.5
times the departing employees annual salary, the mistake is
expensive.

Post dot-com problems Alternatively, the right candidate may
never be found or placed, leaving recruiters and organisations with
the impression that there is a dearth of skills, when in fact the
people with relevant skills exist, they just cant be
found.

Coulter admits this was an issue in the past but maintains that
in the last year, the industry has focused on improving its own
skills in this area. "This has been an issue that the industry has
only recently started to address. Y2K and the buoyant market
attracted recruitment start-ups that didnt have, or need, the
expertise to be successful. Industry training only came about in
the last year, and it really needed to happen.

"ITCRA now runs certified recruitment training, which includes
an IT element. Approximately 25 per cent of our members have
completed this training and this number is growing."

Potential lacking
Another criticism levelled against the agency system is that it
struggles to account for peoples potential. Candidates in a
skills-starved environment are not desperate for jobs, they are
looking to expand their experience and find challenges. Therefore
recruitment agencies searches for staff are inherently flawed
in that they only consider people for jobs they are currently doing
or have already done, which is not attractive to the very people
recruiters are trying to entice.

Take for example the advice recruitment agencies and job sites
give regarding writing your CV - the focus is on education,
qualifications and employment history, not your goals, your ability
to achieve those goals or your natural talent and ability to
learn.

"What I found to be an advantage in Europe and New Zealand
­- my various range of skills and experience - is a
disadvantage in Australia. Recruiters just dont know what
label to slap on me. And candidates are prioritised on
year-counting, such as how many years of Unix do you have? I will
not even start debating how ignorant such questions are," says the
frustrated job seeker.

Coulter agrees that "proactive recruitment" is preferable but
says many recruitment agencies rely on job boards and email to
source and recommend candidates, without even meeting them. "The
internet and email have given some agencies and companies an excuse
not to meet people. This is crazy when it is all about the people!"
says Coulter.

Narrow criteria When you throw in automated CV scanning software
and a desire for specific industry experience as well as technical
acumen, you have a recipe that confines potential candidates to
very narrow criteria.

The trend towards industry experience is a phenomenon of the
last 10 years as companies have jumped on the bandwagon of customer
focused and business-led solutions. Candidates often lament,
though, that job criteria are so ridiculously granular that only a
few people would ever be eligible, which means they could ask for
their weight in gold as a weekly salary.

"I was asked if I had experience in the duty free retail sector.
Despite working in the retail industry for years, I was told the
client was looking for a person with current duty free experience.
Even more entertaining was a request I had on several occasions to
have previously worked for a particular company, not the company
that advertised the role, but a competitor!" explains our
candidate.

The direct approach Recruitment agencies often pronounce their
value-add is derived from the extensive database of candidates they
have the intellectual rights to, the networks they can tap into and
their specialist skills in being able to screen and select suitable
candidates. Yet according to Coulter, many recruitment agencies
dont have the HR skills, industry skills or networks and
databases, instead relying on job boards to generate
candidates.

The Australian Bureau of Statistics ranks candidates directly
approaching employers as the preferred method of finding a job,
with 70 per cent of job seekers doing so. Thirty-five per cent
contact friends or family and 44 per cent answer newspaper ads.
With this in mind, employers may be better off marketing themselves
more as an employer of choice, rather than paying recruiters to set
up lists they own and can mine for candidates that would approach
an organisation directly anyway.

"You need to assess how many candidates an agency sends you - if
there are more than three, with a range of broad skills, then the
agency hasnt understood your brief or hasnt been able
to find suitable candidates and is trying to get one past you,"
says INHOUSE.

Headhunting 101
However, recruitment agencies can deliver real value with candidate
career management. An agency can have an ongoing relationship with
candidates to help them improve their marketability and skill set
through constructive feedback, advice on what skills they need to
update, and briefs on what combination of skills are required to
match current vacancy trends.

This ensures the industry as a whole has more qualified and
relevant candidates and those looking to move are in the loop to
hear about the latest job opportunities.

The best candidates are often the hardest to find. Ironically,
many of the "top candidates" for any given role will be those not
actively searching for a new job, making traditional recruitment
activities, such as advertising, ineffective.

This creates an opportunity for recruitment agencies to pounce
on a real point of difference: the skill and contacts to headhunt
candidates.

But this can become a catch-22 for recruitment agents - if they
up-skill candidates then the task of finding them and convincing
them to move becomes harder and more expensive. Additionally, there
is an ethical and professional element to the equation. Coulter
relates numerous horror stories, with one recruitment agency
headhunting someone they had placed in a role only a couple of
months before.

Similarly, up-skilling candidates might alter the landscape in
terms of the skills shortage, but more skilled workers could mean
inflationary pressures on wages. However, Coulter believes wages
will not reach dot-com proportions again because: "[Now that] CEOs
and CIOs have recognised the value IT adds to an organisation, they
are more easily able to measure it and therefore be realistic about
salaries."

Working out worth With the skills shortage debate being driven,
in part, by employers fear of an increase in wages and
consequently an increase in inflation, the way IT salaries are
determined is significant.

The official line is that recruitment agencies negotiate
packages based on previous wages, the clients budgets,
peers wages within the company, the market and the
candidates skill set and value-add. Yet some candidates have
found themselves ineligible for a role, not because of their
skills, but because of how they value themselves.

"Agencies eliminate anyone who in the past had more or less than
10 to 20 per cent salary than offered for this role. Skills?
Experience? Not relevant for a computer search. They call it
within the range," suggests our unemployed friend.

Salaries are obviously a sensitive subject and can pose a hurdle
to cementing a relationship. Coulter believes candidates often have
to be "educated" about their salary expectations.

"In some cases, they have been with a company for three to four
years, have been performing well and because the client
doesnt want to loose them, they get constant salary rises.
This means they are overpriced when they go into the broader
market."

This is contrary to many peoples understanding that moving
companies results in significant increases in salary. "This can be
the case, [but] it depends on the market," warns Coulter.

Full time or contract? Throw in the dilemma surrounding contract
versus permanent work and agency remuneration, and it gets even
more complicated. According to Coulter, the ICT job market today is
pretty evenly split between permanent and contract workers,
compared to a couple of years ago when contract positions were the
norm as companies tested their resource requirements and had the
luxury of being selective about their employees.

But according to recent figures from Icon Recruitment, 82 per
cent of all IT jobs advertised in the past two years have been for
contract positions.

Two challenges arise with employee remuneration. First, the
recruitment industry has a reputation for charging excessive fees,
hidden from the candidate and expensive to the client. This is
especially true of contract positions, where some candidates accuse
agencies of taking home more than they themselves do.

"There was certainly a perception in the past that recruitment
agencies charged exorbitant fees. We have an open book policy,
which breeds trust and openness and helps us maintain our
candidates. But this open book policy isnt standard in the
industry," explains Coulter.

Second, the very nature of contract positions ensures that
recruiters have an ongoing candidate base from which to select,
whereas permanent positions should be taboo. This makes contract
placements quite attractive to agencies yet they can be expensive.
The result can be a dilemma between loyalty to a client and the
marketability of a candidate. And like any industry, there are good
practitioners and bad ones.

In June 2002 there were 2,445 for-profit organisations in
Australia involved in the provision of employment services, which
made approximately 3.5 million job placements. Inevitably, there
are those focused on sales more than client and candidate
satisfaction. "We have to raise the level of professionalism and
trust in the industry," says Coulter.

The consequences of a skills shortage are significant - a rise
in wages could lead to a rise in inflation, which in turn can
impact interest rates, which affects most Australians on a personal
level.

Sustaining prosperity The Federal Treasurer, Peter Costello,
stated at the Sustaining Propensity conference in Melbourne on 31
March: "I do not believe we are yet seeing the beginning of the
long-term problem. I think we are just at a favourable point in the
economic cycle - a point we should attempt to continue and improve
upon. But I do believe in the longer term - in decades time -
Australia will face a long-term structural shortage of labour."

In a press statement from the ACS launching its work/life
balance policy, society president Edward Mandla says: "We are
facing a potential skills shortage in the ICT industry -
particularly in the longer term with diminishing student enrolments
in ICT disciplines and low participation rates of women in the IT
workforce."

CIOs could start preparing for it by assessing the effectiveness
of their recruitment agency and policy. Similarly IT departments,
recruitment companies and other related fields in the IT industry
should look at starting up work experience programs, help companies
better manage graduate programs, and act as advisers to the
candidates on their recruitment databases.

But perhaps the most important step is to assess what the
universal cry of "skills shortage" really means.